The US economy makes up 21% of global GDP. Annual per capital GDP is $51,700. The country's population is 314 million and is forecast to grow by 17 million (or 5.3%) by 2018.

The US Current Account deficit is 2.7% of GDP, down sharply from 5.8% in 2006. The government's budget deficit was 8% of GDP in 2012, but forecast to be only around 4% of GDP in 2013. The government's gross debt to GDP is 103%. The Fed, the US central bank, is creating $85 billion of fiat money a month, which is approximately 6% of GDP per year. The economy grew by 2.8% in 2012.

Main Issue: How to wind down - and eventually end - Quantitative Easing, without causing a stock market crash, a property market crash and a new, severe global recession.

CHINA

China's economy is the second largest in the world. It accounts for 10% of global GDP. Per capita GDP is $6,100. The country's population is 1.35 billion and is forecast to increase by 41 million (or 3%) by 2018.

China's Current Account surplus is 2.4% of GDP, down sharply from 10% of GDP in 2007. The government's budget deficit was 2.2% of GDP in 2012 and gross government debt was 26% of GDP. It should be noted, however, that the finances of the provincial governments may be a cause for serious concern. The PBOC, China's central bank, is not creating fiat money in a QE-style operation. However, it has accumulated $3.7 trillion in foreign exchange reserves since 1990 by creating an equivalent amount of fiat money. The economy grew by 7.7% in 2012.

Main Issues: China's economic growth model of very rapid investment growth and export-led growth is in crisis because the Americans, the Europeans and the Chinese themselves do not have sufficient income to absorb China's current industrial output. Extremely rapid credit growth since 2009 threatens to end in economic disaster.

JAPAN

Japan's economy is the third largest in the world, accounting for 8% of global GDP. Per capita GDP is $46,700. The country's population is 128 million. It is forecast to shrink by 2 million (or 1.7%) by 2018.

Japan's Current Account surplus was 1.0% of GPD in 2012, down significantly from 4.9% in 2007. The government's budget deficit was 10% of GDP and gross government debt was 238% of GDP in 2012, much larger than any other industrialized country. Despite this very high level of government debt, it should be noted that the Japanese government can still borrow at extremely low interest rates, only 0.6% per annum on 10-year government bonds. The Bank of Japan, the central bank, is creating the equivalent of $70 billion per month or 14% of GDP per year - even more than the US central bank relative to the size of the US GDP. Japan's economy grew by 2.0% in 2012.

Main Issues: Very high government debt levels, double digit budget deficits, declining global export competitiveness (especially relative to China and Korea), and a shrinking and rapidly aging population.

GERMANY

Germany's economy accounts for 5% of global GDP. Its per capita GDP is $41,900. The country's population is 82 million. It is forecast to decline by 1 million (or 1.2%) by 2018.

Germany's Current Account surplus was 7% of GDP in 2012 and it has averaged more than 6% of GDP per year since 2005. That makes Germany's trade surplus one of the main sources of the global imbalances destabilizing the world economy. The government's budget was balanced in 2012 and the government's gross debt to GDP amounted to 82%. Being part of the Euro Zone, Germany's monetary policy is controlled by the European Central Bank. The German economy grew by 0.9% in 2012.

Main Issues: German banks have made large loans to many of its crisis-hit European neighbors. It is now having difficulty recovering those loans. Moreover, Germany's large Current Account surplus is generating still more liquidity that must either be lent abroad or allowed to enter the Germany economy. Lending abroad could produce yet more non-performing loans, while allowing the money to enter Germany could cause asset price inflation and an economic bubble there.

BRAZIL

Brazil's economy accounts for 4% of global GDP. Its annual per capita GDP is $11,400. The country's population of 198 million is expected to increase by 8 million (or 4.3%) by 2018.

Brazil's Current Account has swung from a surplus of 1.6% of GDP in 2005 to a deficit of 2.5% of GDP in 2012. The government's budget deficit was 2.7% of GDP and its gross government debt was 68% of GDP in 2012. The economy grew by 0.9% last year.

Main Issues: Brazil's economy is heavily dependent on commodity exports. Its manufacturing industry is being undermined by more competitively priced imports from China.

THE UK

The UK economy accounts for 3% of global GDP. Per capita GDP is $39,000. The country's population is 63 million and is expected to increase by 3 million (or 4.7%) by 2018.

The UK's Current Account deficit was 3.8% of GDP in 2012. The government's budget deficit was 7.9% of GDP and the government's gross debt to GDP was 89% in 2012, twice as high as in 2007. The Bank of England has suspended its QE program for the time being. However, it did aggressively create fiat money and buy government bonds between 2008 and 2012; and, as a result, it now holds roughly 30% of the government's debt - a much larger share than in any other country. The UK economy grew by 0.2% in 2012.

Main Issue: The UK economy is very heavily reliant on the Finance industry, which is unstable at best, and a giant Ponzi scheme at worst. Future banking crises could lie ahead.

INDIA

India's economy makes up 3% of global GDP. Its annual per capita GDP is $1,500. The country's population is 1.25 billion and is expected to surge by 100 million (or 8%) by 2018.

India's Current Account deficit is 4.8% of GDP and has deteriorated steadily since 2006. The government's budget deficit was 8% of GPD and gross government debt to GDP was 67% in 2012. The economy grew by 3.2% in 2012.

Main Issues: India is challenged on a number of fronts. Its inflation rate, at 11%, is a serious problem. The government's budget deficit has averaged nearly 8% a year since 2005. Finally, the country's persistent Current Account deficit has to be financed by importing capital. This makes the country vulnerable to domestic asset price inflation if too much foreign money comes in, and vulnerable to a sudden spike in interest rates should that foreign money rush out.

Note: The data cited above was sourced from the IMF and the United Nations Statistics Division. The % share of global GDP numbers are for 2011. All other data refer to 2012 unless otherwise indicated.

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FLOWS

THESIS & THEMES

MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - January 18th - January 25th

On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It's the latest of about 300 store closures in the U.S. that Sears has made since 2010. The news follows announcements earlier this month of multiple store closings from major department stores J.C. Penney and Macy's.

Further signs of cuts in the industry came Wednesday, when Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.

Experts said these headlines are only the tip of the iceberg for the industry, which is set to undergo a multiyear period of shuttering stores and trimming square footage.

Shoppers will likely see an average decrease in overall retail square footage of between one-third and one-half within the next five to 10 years, as a shift to e-commerce brings with it fewer mall visits and a lesser need to keep inventory stocked in-store, said Michael Burden, a principal with Excess Space Retail Services.

"I believe we're going to hear a lot more announcements in the coming months," Burden said. It's "an indication that there is a shift in the retail environment and it's one that will continue."

January is typically a busy month for retailers to announce store closings. According to the International Council of Shopping Centers, 44 percent of annual store closings announced since 2010 have occurred in the first quarter. But this year's closings are likely indicative of a new trend, sparked by more and more shoppers turning to the Web, experts said.

This holiday, online spending increased by 10 percent on desktop devices—a number that will likely grow another 2 percentage points when factoring in the role of mobile devices, according to data tracker comScore. Paired with a compressed holiday shopping calendar and a spate of freezing weather across much of the U.S., online shopping contributed to a nearly 15 percent decline in foot traffic this past holiday season, according to ShopperTrak.

"Stores are making a long-term bet on technology," said Belus Capital Advisors analyst Brian Sozzi. "It simply doesn't make strategic sense to enter a new 15-year lease as consumers are likely to continue curtailing physical visits to the mall."

Rick Caruso, Caruso Affiliated founder and CEO, discusses the future of American malls and explains what shopping malls need to do to become relevant again. "Retail brick and mortar has a great future," Caruso says.

Sozzi said that after a profitable but below-expectations holiday season, the retail industry will face its second "tsunami of store closures across the U.S.," only a few years after what he called the "fire sale holiday season of 2008."

During the recession, the number of shopping center vacancies rose by 5.5 percentage points to 11 percent, according to ICSC data, and has since recovered only 2.1 percentage points.

In addition to J.C. Penney—which announced last week that it will close 33 stores—there are about a dozen retailers that still have too many stores, Sozzi said. Among them: American Eagle, which needs to move some of its aerie lingerie locations into its main stores; Aéropostale, which is on track to close 175 stores over the next few years; and Wal-Mart, which has about 100 stores in the U.S. producing same-store sales declines deeper than 3 percent, Sozzi said.

As for Penney's, Wells Fargo analyst Paul Lejuez said that its store closures are a step in the right direction, but they barely scratch the surface of how many are needed.

"With mall traffic trends very challenging and J.C. Penney facing its own significant company-specific issues, we do not believe a 1,000-plus store fleet is appropriate," Lejuez said in a research note. "In our view, the company needs to close several hundred stores to operate more efficiently, but that is not easy to accomplish overnight."

Retailers need a new approach

That's not to say there aren't a number of young retailers who still have plenty of room to build their store base, Lejuez said. Among them: Lululemon and the fashion-forward Michael Kors and Vince brands, which both recently went public. Kors, which increased its store base by nearly 100 stores last year, is on track to open 50 U.S. stores in 2014.

In a separate note, Lejuez said that the ideal way for young brands to build a retail business today is very different than it was 20 years ago. These days, he said, it makes more sense for a retailer to have half the number of stores they once thought appropriate, and instead concentrate on a small store network and e-commerce business. This will take time to accomplish, however, as the vast majority of store locations are leased and not owned, making them harder to unload, he said.

"There is often a mismatch between the number of stores retailers operate today compared to how many they would choose to operate if they had to do it all over again," Lejuez said.

But it's not just the number of stores that are shrinking—it's also their size, said David Birnbrey, chairman of retail real estate advisory group The Shopping Center Group. As fewer shoppers buy items at the physical store, retailers don't require the same inventory levels to be kept in an attached storage room.

By placing more of their stock in fulfillment centers, they can shrink their stores to cut back on commercial real estate expenses, Birnbrey said. Although retail rents are still well below where they were prior to the recession, they have begun to stabilize, and are expected to show a slight uptick in 2014, according to CB Richard Ellis.

"I think stores are typically downsizing right now, and I think they're doing it because they had unsustainable inventory levels," Birnbrey said.

Steering clear of traditional malls

One big shift in store closings has come from retailers shying away from indoor malls, instead favoring outlet centers, outdoor malls or stand-alone stores. Although new retail construction completions are at an all-time low, according to CB Richard Ellis, the supply of new outlet centers has picked up in recent quarters.

"There's no question that mall stores are closing quicker than open air, as far as the department stores," Birnbrey said.

Rick Caruso, founder and CEO of Caruso Affiliated, said at the recent National Retail Federation convention that without a major reinvention, traditional malls will soon go extinct, adding that he is unaware of an indoor mall being built since 2006.

"Any time you stop building a product, that's usually the best indication that the customer doesn't want it anymore," he said.

But retailers aren't throwing in the towel just yet. Turning brick-and-mortar shopping into a retail experience was one of the main topics discussed at the NRF convention this month, with retailers brainstorming ways to integrate targeted mobile couponing and high-tech gadgets to entice shoppers who may have been lost to the Web.

Cocktails, cabanas and credit quality were some of the talking points at a commercial real estate conference held this week in Miami, as attendees swapped their overcoats for beachwear and sat down to discuss the rebounding market.

The annual summit has for years been a calendar highlight for the Wall Street bankers who originate commercial real estate loans and then bundle them into bonds known as commercial mortgage-backed securities (CMBS).

This year’s event was held at the Fontainebleau, a more upscale – and, crucially, larger – venue that offered attendees an on-site nightclub and a spa with “Swarovski crystal pedicures” on its menu of services.

The sprawling new location is symbolic of the broader recovery in some parts of the securitisation market. Sales of CMBS totalled $102bn last year, the highest since the financial crisis, and issuance is expected to increase further in 2014. It is also indicative of another development: in addition to accommodating the hundreds of bankers who have historically frequented the conference, this year’s Miami gathering played host to an expanded selection of non-bank lenders.

Most notable were the large numbers of representatives from non-traded real estate investment trusts (Reits) – tax-friendly investment vehicles that invest in property and also originate new loans.

While that is a deeply uninteresting description of their activities, these non-traded Reits are often included under the far more intriguing label of “shadow banks”.

There has been an increasing amount of talk recently about the growth of “shadow banking” – most of it supremely unflattering. Shadow banks, we are often told, are the unregulated institutions that lurk in the dark corners of the financial system – away from the supervised activities of run-of-the-mill commercial banks.

The frequent implication is that these indistinct entities are growing as new financial regulation begins to have an impact on the activities of traditional banks, and that this growth poses a threat to the safety of the overall financial system.

Yet, just like banks, shadow lenders serve a purpose – they create the credit and securities that are demanded by investors and, hopefully, supported by the needs of the real economy.

The growth of shadow lenders is therefore demonstrative of a truism of finance: squeeze one segment of the system and the activity you are attempting to control is likely to manifest itself elsewhere.

If banks retreat from the business of manufacturing in-demand assets such as CMBS or originating loans, you invite growth of non-bank lenders which do the same thing in a cheaper and more efficient way. Reits enjoy lighter regulation, benefit from tax efficiencies and possess increasingly deep pockets that allow them to make aggressive loans to property developers.

Their role in the market is growing – as is that of hedge funds and “business development companies” that provide capital to middle-market companies, and a whole host of other speciality financiers.

At the Miami conference, upstart non-bank lenders carried pitch books to sell their businesses to yield-hungry investors, raising expectations that more than 10 new firms will this year begin contributing loans to CMBS deals, according to Kroll Bond Ratings.

While it’s fair to worry about the rise of shadow lenders themselves, it seems there is perhaps also an under-appreciated danger: the possibility that non-bank lenders will encourage riskier behaviour at larger banks that now find themselves compelled to try to compete with the shadows.

Competition is increasing and the poolside bonhomie that pervaded the Miami conference may not last should bankers see their business (or bonuses) eroded by their shadow lender counterparts.

Here, too, the event has been moved to more luxurious accommodation than has been booked in prior years – the swanky Cosmopolitan Hotel on the glittering Las Vegas Strip.

Expect the mood there to be as buoyant as in Miami, and the attendees just as varied. What will be interesting to see is how regular conference-going bankers react to the proliferation of party-crashers from the world of shadow lending.

Under the relentless thrust of accelerating over-population and increasing over-organization, and by means of ever more effective methods of mind-manipulation, the democracies will change their nature; the quaint old forms—elections, parliaments, Supreme Courts and all the rest—will remain. The underlying substance will be a new kind of non-violent totalitarianism. All the traditional names, all the hallowed slogans will remain exactly what they were in the good old days. Democracy and freedom will be the theme of every broadcast and editorial—but Democracy and freedom in a strictly Pickwickian sense. Meanwhile the ruling oligarchy and its highly trained elite of soldiers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit.

- Aldous Huxley, Brave New World Revisited, published 1958

It’s always felt a bit bizarre and, indeed slightly embarrassing, that of all the books I have read in my days, Aldous Huxley’s 1932 classic Brave New World was not amongst them. Not only is the book frequently mentioned to make political and social statements about contemporary times, the novel’s concept always caught my interest. I just never got around reading it. Until late last year.

I loved this book and was very pleasantly surprised. I was prepared for a more fearful and overwhelmingly dark and twisted experience. While there were obvious elements of those things, it was a much more enjoyable read than I anticipated. Indeed, it was a very human book, as ironic as that might sound. As much as the “Controllers” in Brave New World were indeed in control, the human spirit still managed to bubble to the surface. To the point that the controllers had to designate certain islands for the iconoclasts which inevitably emerged from within the “Alpha” class. All of the drugs, brainwashing and conditioning couldn’t totally break the human spirit. As such, it was a much more hopeful and nuanced novel than I expected it to be. If you haven’t readit, I suggest making it your next book. If you have read it, read it again.

However, this post isn’t about Brave New World. While that book is indeed a creative warning, it is still fiction and a work of art more than anything else. Twenty six years after its publication, Huxley wrote Brave New World Revisited, in which he takes stock of the post World War II period. His analysis is grave. He saw the world progressing toward his nightmare much faster than he anticipated. Brave New World Revisited is a brilliant work of non-fiction and filled with almost incomprehensibly prescient predictions. It also provides a great deal of advice to future generations. Advice which we must immediately heed.

Of all the solutions Huxley focuses on in Brave New World Revisited, from proper education, to a simple acknowledgment of humanity as moderately gregarious animal not prone to over-organization; the most profound, and I think useful recommendation, is for us to decentralize. This has been a theme of mine and many other writers for some time now. Fortunately, through things like 3D-Printing, Bitcoin and other decentralized crypto-currencies, open source software, crowd funding, social media, etc, the world is moving from centralization to radical decentralization. People will be more connected than ever, but power will be more decentralized. We need to continue to push rapidly in this direction and a whole new incredible world will emerge. Indeed, it is being born as I write this.

Several years ago after reading Hayek’s Road to Serfdom I wrote a lengthy post highlighting key excerpts for those who were interested, but didn’t have the time or inclination to read the whole thing. Due to that post’s popularity and effectiveness, I have attempted to do the same with Brave New World Revisited. I hope this inspires you all to read the entire thing. Enjoy.

From Chapter 2: Quantity, Quality, Morality

And now let us consider the case of the rich, industrialized and democratic society, in which, owing to the random but effective practice of dysgenics, IQ’s and physical vigor are on the decline. For how long can such a society maintain its traditions of individual liberty and democratic government? Fifty or a hundred years from now our children will learn the answer to this question.

My Thoughts: Yes, indeed we are learning the answer to this right now. Just look around you.

From Chapter 3: Over-Organization

Under a dictatorship the Big Business, made possible by advancing technology and the consequent ruin of Little Business, is controlled by the State-that is to say, by a small group of party leaders and the soldiers, policemen and civil servants who carry out their orders. In a capitalist democracy such as the United States, it is controlled by what Professor C. Wright Mills has called the Power Elite. This Power Elite directly employs several millions of the country’s working force in its factories, offices and stores, controls many millions more by lending them the money to but its products, and, through its ownership of the media of mass communications, influences the thoughts, the feelings and the actions of virtually everybody.

My Thoughts: If you talk as Huxley writes above in “polite society” you will be labeled a conspiracy theorist or kook.

From Chapter 3: Over-Organization

It is in the social sphere, in the realm of politics and economics, that the Will to Order becomes really dangerous. Here the theoretical reduction of unmanageable multiplicity to comprehensible unity becomes the practical reduction of human diversity to subhuman uniformity, of freedom to servitude. In politics the equivalent of a fully developed scientific theory or philosophical system is a totalitarian dictatorship. In economics, the equivalent of a beautifully composed work of art is the smoothly running factory in which the workers are perfectly adjusted to the machines. The Will to Order can make tyrants out of those who merely aspire to clear up a mess. The beauty of tidiness is used as a justification for despotism.

Organization is indispensable; for liberty arises and has meaning only within a self-regulating community of freely cooperating individuals. But, though indispensable, organization can also be fatal. Too much organization transforms men and women into automata, suffocates the creative spirit and abolishes the very possibility of freedom. As usual, the only safe course is in the middle, between the extremes of laissez-faire at the one end of the scale and of total control at the other.

My Thoughts: Huxley accurately notes that the “will to order” is a natural part of the human psyche. There are disciplines where the “will to order” is actually useful and necessary to human progress; however, he warns that in the social sphere it is deadly and usually ends with totalitarianism.

From Chapter 3: Over-Organization

City life is anonymous and, as it were, abstract. People are related to one another, not as total personalities, but as the embodiment of economic functions or, when they are not at work, as irresponsible seekers of entertainment. Subjected to this kind of life, individuals tend to feel lonely and insignificant. Their existence ceases to have any point or meaning.

My Thoughts: Huxley clearly sees the sprawling metropolis as incongruent with human nature and freedom. It is a theme he consistently returns to throughout the book.

From Chapter 3: Over-Organization

Biologically speaking, man is a moderately gregarious, not a completely social animal—a creature more like a wolf, let us say, or an elephant, than like a bee or an ant. In their original form human societies bore no resemblance to the hive or the ant heap; they were merely packs. Civilization is, among other things, the process by which primitive packs are transformed into an analogue, crude and mechanical, of the social insects’ organic communities. At the present time the pressures of over-population and technological change are accelerating this process. The termitary has come to seem a realizable and even, in some eyes, a desirable ideal. Needless to say, the ideal will never in fact be realized. A great gulf separates the social insect from the not too gregarious, big-brained mammal; and even though the mammal should do his best to imitate the insect, the gulf would remain. However hard they try, men cannot create a social organism, they can only create an organization. In the process of trying to create an organism they will merely create a totalitarian despotism.

My Thoughts: A simply brilliant and incredibly important warning.

From Chapter 3: Over-Organization

The impersonal forces of overpopulation and over-oragnization, and the social engineers who are trying to direct these forces, are pushing us in the direction of a new medieval system. This revival will be made more acceptable than the original by such Brave-New—Worldian amenities as infant conditioning, sleep-teachings and drug-induced euphoria; but, for the majority of men and women, it will still be a kind of servitude.

My Thoughts: Yep, he predicted our current neo-feudalistic state in 1958.

From Chapter 4: Propaganda in a Democratic Society

Given a fair chance, human beings can govern themselves, and govern themselves better, though perhaps with less mechanical efficiency, than they can be governed by “authorities independent of their will.” Given a fair chance, I repeat; for the fair chance is an indispensable prerequisite. No people that passes abruptly from a state of subservience under the rule of a despot to the completely unfamiliar state of political independence can be said to have a fair chance of making democratic institutions work.

My Thoughts: Would’ve been nice if we thought about that before we invaded Iraq (of course, the problem is our goal was never to bring Democracy to Iraq in the first place).

From Chapter 4: Propaganda in a Democratic Society

In regard to propaganda the early advocates of universal literacy and a free press envisaged only two possibilities: the propaganda might be true, or it might be false. They did not foresee what in fact has happened, above all in our Western capitalist democracies—the development of a vast mass communications industry concerned in the main neither with the true nor the false, but with the unreal, the more or less totally irrelevant. In a word, they failed to take into account man’s almost infinite appetite for distractions.

For conditions even remotely comparable to those now prevailing we must return to imperial Rome, where the populace was kept in good humor by frequent, gratuitous doses of many kinds of entertainment—from poetical dramas to gladiatorial fights, from recitations of Virgil to all-out boxing, from concepts to military reviews and public executions. But even in Rome there was nothing like the non-stop distractions now provided by newspapers and magazines, by radio television and the cinema.

My Thoughts: This brings me to a short story I’d like to share. I was on the plane as I was reading this and I put down my book for a second to look around me. I had an aisle seat, and so was at a good vantage point from which to take stock of the plane. I was actually stunned to notice that there was not a single other person reading a book anywhere around me. I actually enjoy the lack of Wifi on flights as it forces me to engage in some old school book reading. To my surprise no one else seemed to see it that way. Horrifyingly, the only people that weren’t dozing off or watching television were still on their smart phones. Even worse, at least five of them seemed to be playing the same game! It looked like some sort of Tetris game with jewels. So despite the lack of Wifi, humanity’s ability for mindless entertainment and distraction prevailed. Wifi or no wifi, these folks were going to be on their “smart”phones one way or the other.

From Chapter 5: Propaganda Under a Dictatorship

Assembled in a crowd, people lose their powers of reasoning and their capacity for moral choice. Their suggestibility is increased to the point where they cease to have any judgement or will of their own. They become very excitable, they lose all sense of individual or collective responsibility, they are subject to sudden accesses of rage, enthusiasm and panic. In a word, man in a crowd behaves as though he had swallowed a large dose of what I have called “herd-poisoning.”

Reading is a private, not a collective activity. The writer speaks only to individuals, sitting by themselves in a state of normal sobriety. The orator speaks to masses of individuals, already well primed with herd poison. They are at his mercy and, if he knows his business, he can do what he likes with them.

My Thoughts: This is something to always be aware of. Oration to crowds is the most effective form of propaganda distribution and brainwashing.

From Chapter 5: Propaganda Under a Dictatorship

In Hitler’s words, the propagandist should adopt “a systematically one-sided attitude towards every problem that has to be dealt with.” He must never admit that he might be wrong or that people with a different point of view might be even partially right. Opponents should not be argued with; they should be attacked, shouted down, or, if they become too much of a nuisance, liquidated. The morally squeamish intellectual may be shocked by this kind of thing. But the masses are always convinced that “right in on the side of the active aggressor.”

My Thoughts: This is why Obama just lies non-stop with zero shame. His strategy is to just stick to the propaganda and go with it at all costs, no matter how irrational and obviously deceptive.

From Chapter 6: The Arts of Selling

People may start out with an initial prejudice against tyrants; but when tyrants or would-be tyrants treat them to adrenalin—releasing propaganda about the wickedness of their enemies- particularly of enemies weak enough to be persecuted-they are ready to follow him with enthusiasm.

Almost all of us long for peace and freedom; but very few of us have much enthusiasm for the thoughts, feelings and actions that make for peace and freedom. Conversely almost nobody wants war or try nanny; but a great many people find an intense pleasure in the thoughts, feelings and actions that make for war and tyranny.

My Thoughts: That’s probably the scariest and most depressing thing I read.

Chapter 6: The Arts of Selling

“Both parties,” we were told in 1956 by the editor of a leading business journal, “will merchandize their candidates and issues by the same methods that business had developed to sell goods. These include scientific selection of appeals and planned repetition…The political merchandisers appeal only to the weakness of voters, never to their potential strength. They make no attempt to educate the masses into becoming fit for self-government, they are content merely to manipulate and exploit them.

In one way or another, as vigorous he-man or kindly father, the candidate must be glamorous. He must also be an entertainer who never bores his audience. Inured to television and radio, that audience is accustomed to being distracted and does not like to be asked to concentrate or make a prolonged intellectual effort. All speeches by the entertainer-candidate must therefor be short and snappy. The great issues of the day must be dealt with in five minutes at the most-and preferably (since the audience will be eager to pass on to something a little livelier than inflation or the H-bomb) in sixty seconds flat. The nature of oratory is such that there has always been a tendency among politicians and clergymen to over-simplify complex issues. From a pulpit or a platform even the most conscientious of speakers finds it very difficult to tell the whole truth. The methods now being used to merchandise the political candidate as though he were a deodorant positively guarantee the electorate against ever hearing the truth about anything.

My Thoughts: It’s simply incredible how clearly he saw all of this more than fifty years ago.

From Chapter 7: Brainwashing

The effectiveness of political and religious propaganda depends upon the methods employed, not upon the doctrines taught. These doctrines may be true or false, wholesome or pernicious—it makes little or no difference. If the indoctrination is given in the right way at the proper stage of nervous exhaustion, it will work. Under favorable conditions, practically everybody can be converted to practically anything.

From Chapter 8: Chemical Persuasion

That a dictator could, if he so desired, make use os these drugs for political purposes is obvious. He could ensure himself against political unrest by changing the chemistry of his subjects’ brains and so making them content with their servile condition…But how, it may be asked, will the dictator get his subjects to take the pills that will make them think, feel and behave in the ways he finds desirable? In all probability it will be enough merely to make the pill available…But the demand of the American public for something that will make life in an urban-industrial environment a little more tolerable is so great that doctors are now writing prescriptions for the various tranquilizers at the rate of forty-eight millions a year.

Too much tension is a disease; but so is too little. There are certain occasions when we ought to be tense, when an excess of tranquillity (and especially of tranquility imposed from the outside, by a chemical) is entirely inappropriate.

“Actually, we who engage in nonviolent direct action are not the creators of tension. We merely bring to the surface the hidden tension that is already alive. We bring it out in the open, where it can be seen and dealt with. Like a boil that can never be cured so long as it is covered up but must be opened with all its ugliness to the natural medicines of air and light, injustice must be exposed, with all the tension its exposure creates, to the light of human conscience and the air of national opinion before it can be cured.”

From Chapter 9: Subconscious Persuasion

In the light of what has been said about persuasion-by-assocation and the enhancement of emotions by subliminal suggestion, let us try to imagine what the political meeting of tomorrow will be like. The candidate (if there is still a question of candidates), or the appointed representative of the ruling oligarchy, will make his speech for all to hear. Meanwhile the tachistoscopes, the whispering and squeaking machines, the projectors of images so dim that only the subconscious mind can respond to them, will be reinforcing what he says by systematically associating the man and his cause with positively charged words and hallowed images, and by strobonically injecting negatively charged words and odious symbols whenever he mentions the enemies of the State or the Party…Because all of this is still safely in the future, we can afford to smile. Ten or twenty years from now, it will probably seem a good deal less amusing. For what is now merely science fiction will have become everyday political fact.

My Thoughts: We are living it and there’s certainly nothing amusing about it.

From Chapter 10: Hypnopaedia

A person in deep sleep is unsuggestible. But when the subjects in light sleep are given suggestions, they will respond to them. Mr. Barber found, the the same way that they respond to suggestions when in the hypnotic trance.

From the heightened suggestibility associated with light sleep and hypnosis let us pass to the normal suggestibility of those who are awake—or at least who think they are awake. (In fact, as the Buddhists insist, most of us are half asleep all the time and go through life as somnambulists obeying somebody else’s suggestions. Enlightenment is total awakens. The word “Buddha” can be translated as “The Wake.”)

From Chapter 11: Education for Freedom

Freedom is therefore a great good, tolerance a great virtue and regimentation a great misfortune.

The genetic standardization of individuals is still impossible; but Big Government and Big Business already posses, or will very soon possess, all the techniques for mind-manipulation described in Brave New World, along with others of which I was too unimaginative to dream. Lacking the ability to impose genetic uniformity upon embryos, the rulers of tomorrow’s over-populated and over-organized world will try to impose social and cultural uniformity upon adults and their children. To achieve this end, the will (unless prevented) make use of all the mind-manipualting techniques at their disposal and will not hesitate to reinforce these methods of non-rational persuasion by economic coercion and threats of physical violence. If this kind of tyranny is to be avoided, we must begin without delay to educate ourselves and of children for freedom and self-government.

From Chapter 11: Education for Freedom

But unfortunately correct knowledge and sound principles are not enough. An unexciting truth may be eclipsed by a thrilling falsehood. A skillful appeal to passion is often too strong for the best of good resolutions. The effects of false and pernicious propaganda cannot be neutralized except by a thorough training in the art of analyzing its techniques and seeing through its sophistries.

In cases where the selecting and abstracting have been dictated by a system that is not too erroneous as a view of the nature of things, and where the verbal labels have been intelligently chosen and their symbolic nature clearly understood, our behavior is apt to be realistic and tolerably decent. But under the influence of badly chosen words, applied, without any understanding of their merely symbolic character, to experiences that have been selected and abstracted in the light of a system of erroneous ideas, we are apt to behave with a fiendishness and an organized stupidity, of which dumb animals (precisely because they are dumb and cannot speak) are blessedly incapable.

My Thoughts: Essentially, the reason humanity is able to create such gigantic instances of suffering relates to our higher intelligence combined with our ability to be easily brainwashed and manipulated by the nastiest of humans on the bell curve.

From Chapter 12: What Can Be Done?

Under the relentless thrust of accelerating over-population and increasing over-organization, and by means of ever more effective methods of mind-manipulation, the democracies will change their nature; the quaint old forms—elections, parliaments, Supreme Courts and all the rest—will remain. The underlying substance will be a new kind of non-violent totalitarianism. All the traditional names, all the hallowed slogans will remain exactly what they were in the good old days. Democracy and freedom will be the theme of every broadcast and editorial—but Democracy and freedom in a strictly Pickwickian sense. Meanwhile the ruling oligarchy and its highly trained elite of soldiers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit.

Or take the right to vote. In principle, it is a great privilege. In practice, as recent history has repeatedly shown, the right to vote, by itself, is no guarantee of liberty. Therefore, if you wish to avoid dictatorship by referendum, break up modern society’s merely functional collectives into self-governing, voluntarily co-operating groups, capable of functioning outside the bureaucratic systems of Big Business and Big Government.

Over-population and over-organization have produced the modern metropolis, in which a fully human life of multiple personal relationships has become almost impossible. Therefore, if you wish to avoid the spiritual impoverishment of individuals and whole societies, leave the metropolis and revive the small country community, or alternatively humanize the metropolis by creating within its network of mechanical organization the urban equivalents of small country communities, in which individuals can meet and cooperate as complete persons, not as the mere embodiments of specialized functions.

My Thoughts: His ultimate conclusion, and one with which I agree, is that we need to decentralize to main free.

The older dictators fell because they could never supply their subjects with enough bread, enough circuses, enough miracles and mysteries.

01-22-14

THESIS

STATISM

01-21-14

Totalitarian Collectivism

"This difference would likely have the long-term effect of fewer people relying on independent web sites or news and information and make it difficult for them to compete with the big guys." - Chancellor Williams

The worst fears of all free speech proponents are upon us. The Verizon suit against the Federal Communications Commission, appellate decision sets the stage for a Supreme Court review. The Wall Street Journal portrays the ruling in financial terms: "A federal court has tossed out the FCC's "open internet" rules, and now internet service providers are free to charge companies like Google and Netflix higher fees to deliver content faster."

In essence, this is the corporate spin that the decision is about the future cost for being connected.

"The ruling was a blow to the Obama administration, which has pushed the idea of "net neutrality." And it sharpened the struggle by the nation's big entertainment and telecommunications companies to shape the regulation of broadband, now a vital pipeline for tens of millions of Americans to view video and other media.

For consumers, the ruling could usher in an era of tiered Internet service, in which they get some content at full speed while other websites appear slower because their owners chose not to pay up.

"It takes the Internet into completely uncharted territory," said Tim Wu, a Columbia University law professor who coined the term net neutrality."

What the Journal is not telling you is that this "uncharted territory" is easy to project. If ISP’s will be able to charge varied rates or decide to vary internet speed, it is a very short step towards selectively discriminate against sites based upon content. Do not get lulled into thinking that constitutional protective political speech is guaranteed.

"Verizon's argument that network neutrality regulations violated the firm's First Amendment rights. In Verizon's view, slowing or blocking packets on a broadband network is little different from a newspaper editor choosing which articles to publish, and should enjoy the same constitutional protection."

The response from advocates of the Net Neutrality standard, that is about to vanish, sums up correctly.

"The First Amendment does not apply, however, when Verizon is merely transmitting the content of third parties. Moreover, these groups point out, Verizon itself has disclaimed responsibility for its users' content when it was convenient to do so, making its free speech arguments ring hollow."

Prepare for the worst. The video, Prepare To Be Robbed. Net Neutrality Is Dead!, which includes frank language and expletives, provides details that place the use of internet access into question coming out of this appellate decision.

Analyze the implications logically. It is one thing to charge a for profit service like Netflix a higher fee to transverse the electronic bandwidth of a communication network. Selling a membership to an end user is the source of their cash flow. However, most activist political sites usually provide internet users free access to their particular viewpoint and source links.

Your internet service provider controls the pipeline that feeds your devices and data connection. No matter which company you pay for this service, you are dependent upon this union. A free WiFi link may well become a memory. Beaming a satellite signal, mostly is an alternative, when DSL, cable or other broadband is not available.

No matter what method is used to surf the net, this decision clearly implies that internet access is now a privilege, at the effective discretion, if not mercy; of a provider that allow an account for service.

Next, consider the implication that search engines will use this decision to re-work their algorithms lowering their spider bots selection of sites that challenge the "PC" culture. Restrictive categorization used for years by Google, Yahoo and Bing can use this decision as cover to purge dissenting sites even more from their result rankings.

It is common knowledge that YouTube censors and targets certain uploads. One particular subject that experiences technical glitches is Fukushima. The video You Tube Censoring Truther Channels explains the drill. Add to the frustration are the ads, especially the ones with no skip option and imagine future requirements for uploading approval. What is next, a paid subscription to use and upload to the service?

"Without Net Neutrality, ISPs will be able to devise new schemes to charge users more for access and services, making it harder for us to communicate online – and easier for companies to censor our speech."

Corporate gatekeepers will control "where you go and what you see."

Verizon, AT&T, Comcast and Time Warner Cable "will be able to block content and speech they don’t like, reject apps that compete with their own offerings, and prioritize Web traffic…"

They’ll be able to "reserve the fastest loading speeds for the highest bidders (while) sticking everyone else with the slowest."

Doing so prohibits free and open communications. Censorship will become policy. Net Neutrality is too important to lose."

"In the U.S., there's no practical competition. The vast majority of households essentially have a single broadband option, their local cable provider. Verizon and AT&T provide Internet service, too, but for most customers they're slower than the cable service. Some neighborhoods get telephone fiber services, but Verizon and AT&T have ceased the rollout of their FiOs and U-verse services--if you don't have it now, you're not getting it.

Who deserves the blame for this wretched combination of monopolization and profiteering by ever-larger cable and phone companies? The FCC, that's who. The agency's dereliction dates back to 2002, when under Chairman Michael Powell it reclassified cable modem services as "information services" rather than "telecommunications services," eliminating its own authority to regulate them broadly. Powell, by the way, is now the chief lobbyist in Washington for the cable TV industry, so the payoff wasn't long in coming."

In a digital environment, access to an internet that provides uncensored content at the lowest costs is a direct threat to the corporate economy. Innovation and creative cutting-edge services are clearly marked as competing challenges to the Amazon jungle of merchandising. The big will just get bigger.

Then the unavoidable effects from the "all the news fit to report" mass medium, intensifies their suppression of honest investigative journalism. Filtering out the alternative and truth media is the prime objective of this ruling. Eliminating political dissent from the internet is the ultimate implication. What would the net be like without access to the Drudge Report?

When the cable or satellite services bundle their programming into a "take it or leave it" format, the choices for the consumer becomes a major financial burden just to watch the few channels that have interest. Applying this pattern to the internet will cause even greater resentment.

Just look at the disaster from the Yahoo retooling. That Ms. "wicked witch" MM have pushed up the stock price, but ask any yahoo group member what they think of the new format. This is a classic example of how to turn off users and ruin your product.

Subscription services are playing with fire. With the collapse of the main street economy, the added fees to access content that is mediocre at best, is the actual fallout. Like the dinosaur TV networks, the corporatist sites risk total rejection from internet visitors.

Totalitarian culturalists are rejoicing with this latest damper on free speech. News by way of government press releases is pure propaganda. How did this happen?

"The FCC tried to appease the out-of-control corporate egos of behemoths like Verizon and Comcast by pretending internet providers were special and classifying them as "information service providers" and not "telecommunications carriers." The wrong words. Then, once everyone was wearing the nametag they wanted, the FCC tried to impose common carrier-style telecommunications regulations on them anyway."

Credo Action believes that "FCC Chairman Tom Wheeler can undo the Bush-era decision to deregulate broadband Internet providers and allow them to operate outside of the legal framework that has traditionally applied to companies that offer two-way communication services."

Such optimism seems naive in light of the real controllers of policy, much the same, for the Supreme Court coming to the rescue. Mark this court decision as the strategic destruction of the internet as a beacon of unfeigned free expression of information and open political speech. The programmers will be working overtime to set up layers of tasks, restrictions and huddlers to jump over. If you think Facebook censorship is bad, get ready for a purely governmental approved net along the Chinese model.

SARTRE – January 20, 2014

01-21-14

THESIS

STATISM

2012 - FINANCIAL REPRESSION

2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS

2010 - EXTEND & PRETEND

THEMES

FLOWS -FRIDAY FLOWS

NATURE OF WORK -PRODUCTIVITY PARADOX

GLOBAL FINANCIAL IMBALANCE - FRAGILITY & INSTABILITY

CENTRAL PLANINNG -SHIFTING ECONOMIC POWER

SECURITY-SURVEILLANCE COMPLEX -STATISM

STANDARD OF LIVING -GLOBAL RE-ALIGNMENT

CORPORATOCRACY -CRONY CAPITALSIM

CORRUPTION & MALFEASANCE -MORAL DECAY - DESPERATION, SHORTAGES..

SOCIAL UNREST -INEQUALITY & BROKEN SOCIAL CONTRACT

Every elite in Davos ought to see and understand this chart

Lower income percentiles have seen monster growth since the late 80s. This growth represents the emerging economies and the rise of the Chinese middle class.

Then you have the developed world middle class, which has seen almost no real income growth over the last few decades (which probably explains a lot of the current angst over inequality).

Then you have the rise of the ultra-elite, the global 1%, which has done fantastically well during all this time. As Plunkett puts it.

For some context here's a chart of current inflation rates around the world from market guru Richard Bernstein. Bernstein believes that weak currencies and high inflation rates is bad news for the emerging markets.

EMERGING MARKETS

"When productivity fails to be a competitive advantage, then countries have to compete purely on price and devalue their currencies. Devaluing a currency often results in higher inflation rates because the prices of imported goods, both input raw materials and consumer goods, go up. Emerging markets’ current high inflation rates will likely limit emerging market countries’ exchange rate flexibility. Some EM countries are already starting to lose market share as a result."

Tipping Points Life Cycle - ExplainedClick on image to enlarge

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